FORD CASE STUDY

Topics: Ford Motor Company, Alan Mulally, Ford Taurus Pages: 7 (2326 words) Published: October 29, 2013
548

Part Four

| Extending Marketing

COMPANY Case
Ford: Resurrecting an Iconic
Company
The old phrase, “The bigger they are, the harder they fall,” perfectly describes what has happened to the U.S. auto industry over the past decade. Consider the Ford Motor Company. In 1998, the iconic company accounted for 25 percent of all cars and trucks sold. Its F-series pickup was the best selling vehicle on the planet, with more than 800,000 units rolling off assembly lines. The Ford Explorer held the top slot in the hot SUV market. And the Ford Taurus had been a perennial contender for the top selling sedan. Ford was number two on the Fortune 500 (GM was number one) with

$153 billion in revenues. A strong stock price gave Ford a market value of $73 billion. And according to Interbrand, the company was the sixth most valuable brand in the world, worth $36 billion. But in only 10 years, its position at the top fell apart like a rusting old jalopy. In 2008, its market share sat at just 14 percent. Revenues had dropped to $146 billion, and the company lost

$14.7 billion, the biggest loss in its history. Its stock price had plummeted to only $2 a share, erasing 93 percent of its market value. And it was no longer a top ten brand. It had dropped to the 49th position on the Interbrand top-100 list, worth only $7 billion. The company verged on collapse.

Ford could try to explain its misfortunes by pointing out that the entire auto industry was reeling by 2008. High gas prices and the weakest global economy in over 70 years had made a mess of automobile sales. But that wouldn’t explain its drastic drop in market share or the magnitude of its losses relative to the rest of the industry. The company was in far worse shape than most car companies. Looking back, it’s clear that Ford had taken its eye off the market. It had become too dependent on gas-guzzling trucks and SUVs and could not shift quickly enough to more fuel-efficient vehicles. Its vehicle quality had suffered, and its operations were bloated with excessive costs. In a quest to serve every customer segment—acquiring Land Rover, Volvo, Aston Martin, and

Jaguar—the company had lost touch with the needs of any specific customer segment. All those luxury brands were sapping valuable company resources as well. Finally, the company’s innovation was at an all-time low. Mark Fields, president for the Americas, adds, “We used to have a saying in the company that we were a fast follower. Which meant we were slow.”

A NEW DIRECTION
Even as the company’s financials looked their worst in years, a strategy was already underway to resurrect the company. In 2006, Ford had brought in an industry outsider to perform cardiac resuscitation on the ailing giant. Alan Mulally, who had led Boeing through its most ambitious product launch in decades with the 767 Dreamliner, took the reins as the new CEO. Cheerful and fresh faced, he exuded optimism. “I am here to save an American and global icon,” Mulally declared.

Mulally got to work right away. He cut labor costs by almost 22 percent, bringing the company more in line with new industry leader Toyota. He shuttered unprofitable factories and cut out as much operational fat as possible. In 2008, as GM and Chrysler held their hats out for a government bailout, Ford managed to raise cash the old-fashioned way—by borrowing from a bank to the tune of $23.5 billion. By remaining financially independent,

Ford avoided giving Uncle Sam a say in how the company was
run. It also avoided bankruptcy, a fate that befell its two Detroit siblings.
But the move that put Ford back on the highway was the crafting of a good old-fashioned mission statement. Mulally ordered up small plastic cards that Ford’s 200,000 employees could carry in their wallets featuring what he called “Expected Behaviors.” Those expectations were really four goals that Mulally fully believed would make the company competitive again. To Mulally, this was sacred text. “This is...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about fave Ford Case Study Analysis
  • case study Essay
  • case study Essay
  • CASE STUDY Essay
  • Case Study Essay
  • Case Study Research Paper
  • case study Essay
  • Case Study Essay

Become a StudyMode Member

Sign Up - It's Free